Best Buy, which is considered an A-plus retailer in the electronics space where telephone sales and electronics sales and computer sales should be flying if they are closing 50 stores, I think that has major structural implications for big box retailer, David Tobin said. The implication here is that e-commerce is eating very, very directly into brick-and-mortar retailers.
Observers note that the next batch of securitized commercial mortgages to start maturing in 2013 will be those from the period where underwriting tightened severely, which could put downward pressure on delinquencies. So if you have a sharp increase this year, you’re going to have an equally sharp decrease next year, quotes David Tobin, commenting on the Trepp report.
“We are concerned about the structural implications of the Best Buy store closure announcement,” Tobin, principal of Mission Capital Advisors, said. “This signifies continued erosion in the retail sector and we are challenged to think of who the replacement tenant is for these stores.”
David Tobin, principal at Mission Capital Advisors, said that two factors contributed to the jump in CMBS delinquency rates maturing 2007 loans and unimpressive occupancy across all property types
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CMBS Delinquency Rate Jumps
BY CARL GAINES (/AUTHOR/CARL-GAINES/) APRIL 4, 2012, 10:46 A.M.
CMBS delinquency rates jumped sharply in March, according to data from Trepp. For March 2012, the rate jumped 31 basis points to 9.68 percent, bringing the value of delinquent loans to $58.1 billion.
(http://www.commercialobserver.com/2012/04/cmbs- delinquency-rate-jumps/manus-clancy-feb2010/)
MANUS CLANCY.
The jump is in line with Trepp’s earlier predictions. As The Commercial Observer reported last month, (http://www.commercialobserver.com/2012/03/trepp-cmbs-delinquency-rate-drops-deceptively/) senior managing director Manus Clancy said that, despite a drop for February 2012, that delinquency rates would follow an upward trend.
“We predicted late last year that the delinquency rate would rise largely on the impact of 2007 loans coming due, and today’s report underscores that forecast,” Mr. Clancy said in a prepared statement about this most recent data. “After the rate fell nicely in January and February, we were cautiously hopeful that we’d be wrong. This month’s report shows that the market has a lot of wood to cut and that a rate north
of 10 percent can’t be ruled out.”
For February, multifamily and office fared the worst and in fact the office delinquency rate set a new high, rising 37 basis points to 9.41 percent. Overall, $5 billion in newly delinquent loans helped to bring the
rate up for the month.
David Tobin, principal at Mission Capital Advisors, said that two factors contributed to the jump—
maturing 2007 loans and unimpressive occupancy across all property types.
“Obviously, the ‘Class of 2007’ loans were never expected to ‘graduate on time’ and we expect similarly high newly delinquent loan amounts throughout the year,” Mr. Tobin said, adding that this should drop off in a year.
Meanwhile, Fitch Ratings released its annual default survey, which pointed to a slow-down in U.S. CMBS defaults for 2012. The agency predicts cumulative defaults to reach 14.5 percent in 2012. Last year’s defaults reached 12.7 percent.
Fitch also pegged office loans as of particular concern, finding that the defaults on office loans hit 38.6 percent of all defaults for 2011.
CGaines@observer.com
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Situs Cos. is offering for sale a $100 million distressed loan against the Dream Hotel in midtown Manhattan. The loan is being offered through Mission Capital Advisors, which will take indicative bids from prospective investors on April 17, with final bids due on May 8.
In early 2009, the FDIC shut the doors of New Frontier and began the task of selling some 4,200 active loans worth $1.54 billion. Nineteen of those loans will be on the auction block this spring, as Mission Capital Advisors attempts to sell a portfolio of residential and commercial properties in a sealed bid auction.
Market fundamentals, including employment and financing, are seen as the important drivers for the housing market, rather than government intervention. “It really has to recover on its own,” said David Tobin.
Midland Loan Services has put on the sales block a pair of nonperforming loans with a combined balance of $40.8 million against properties in Lansing, Mich., and Parsippany, N.J. The special servicer has tapped Mission Capital Advisors to orchestrate the sale. It has set a March 8 deadline for indicative bids and will hold a final round of bidding on March 20, with a quarter-end closing target.
Construction lending is making a comeback in Brooklyn because rental and condo prices are rising at a faster rate than land costs.
It’s really hard to build rentals in Manhattan because of the land costs, said Jordan Ray, managing director of debt and equity at Mission Capital Advisors. The deals (in Brooklyn) make sense from a return on cost perspective, whereas it wouldn’t in places like Manhattan where there’s just no land.
Mission Capital’s David Tobin is on, well, a mission. Distressed debt backed by commercial real estate is thriving, and banks should be selling their holdings.
As more private equity players align themselves with special servicers, the industry can expect to see more deals and a more regimented approach to pricing.
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